Endo files for Chapter 11 bankruptcy

Endo entered into a restructuring support agreement with holders of more than a majority of its first lien debt on a sale transaction that would substantially reduce outstanding indebtedness, address remaining opioid and other litigation-related claims and best position Endo for the future. This will allow the company to advance its business transformation with a strengthened balance sheet to create compelling value for its stakeholders over the long term, the company said.

Under the RSA, the debtholder group has committed to providing total purchase consideration of approximately $6 billion in the form of a credit bid, plus the assumption of certain liabilities, for substantially all of the company's assets. The transaction contemplates that the purchaser will:

• Offer employment to all of Endo's active team members;
• Establish voluntary trusts, to be funded with $550 million over 10 years, whereby future proceeds will be set aside for certain opioid claims; and
• Have net funded leverage in an amount no greater than 4.5x.

This "stalking horse" bid will be subject to higher or otherwise better offers.

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"Today's announcement is a significant milestone as we advance our strategic priorities and business transformation so that Endo's value proposition can be realized," said Blaise Coleman, Endo's president and CEO. "By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the company has been defending at an unsustainable cost, we will be able to move forward as a new Endo and reach our full potential."

To facilitate the sale process and provide an appropriate forum for bringing closure to opioid-related and other uncertainties without the need for continued costly, time-consuming litigation, Endo and certain of its subsidiaries initiated voluntary prearranged Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York. Endo's India-based entities are not part of the Chapter 11 proceedings. The company expects to file recognition proceedings in Canada, the United Kingdom and Australia.

"This process will enable us to continue our ongoing business transformation, including investing in our core areas of growth, as we work to execute a transaction to strengthen our balance sheet and secure a strong tomorrow. Our commitment to our mission, team members, customers, patients and communities will not change, and we look forward to emerging from this process better positioned to continue helping everyone we serve live their best lives," said Coleman. 

The company's secured creditors have consented to the use of cash collateral to fund the company's day-to-day business during the process. This significant cash on hand, coupled with positive cash flow from operations, will provide ample liquidity as the company continues to deliver the life-enhancing products that its customers and their patients expect today and in the future, Endo said. Notably, the company and a consortium of state attorneys general have agreed on certain injunctive terms relating to the sale of Endo's opioid products, including with respect to promotion, funding/grants to third parties and suspicious order monitoring, which will be presented to the Court for approval.

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The company shared that it is filing with the Court a series of customary motions to maintain business-as-usual operations on all fronts and uphold its commitments to its stakeholders, including team members, customers, suppliers and business partners, during the process. Approval of these routine "first day" motions, which the company expects to receive in short order, will help facilitate a smooth transition into the process.